Amid persistent governance failures in the financial sector, including undue interference by major shareholders, equity chaos, and misconduct by senior executives, a comprehensive regulatory policy covering banking, securities, and insurance has been formally introduced. On July 31, the National Financial Regulatory Administration, the People's Bank of China, the China Securities Regulatory Commission, and the Ministry of Finance jointly released the "Implementation Opinions on Improving the Governance of Financial Institutions" (the "Opinions"). This document outlines 22 measures focused on enhancing shareholder governance, strengthening internal governance, and improving supervision, with the goal of tackling issues such as improper shareholder intervention and insider control. The Opinions set a target for 2029, aiming to establish a governance mechanism for Financial Institutions that features clear authority and responsibility boundaries, balanced incentive and restraint systems, strict risk management, and standardized, efficient operations. This should lead to significantly enhanced internal stability and risk resilience within the financial system, as well as a marked improvement in the quality and efficiency of financial services supporting high-quality development.

A key breakthrough in the Opinions, compared to previous unified regulatory standards, is the establishment of a tiered and differentiated supervision system to improve regulatory precision. The Opinions implement classified oversight, urging Financial Institutions to develop governance structures suited to their asset size, risk profile, and equity composition. They strengthen the identification and regulation of control over institutions, applying a substance-over-form principle to conduct look-through supervision of shareholder equity and related-party transactions. The implementation of differentiated regulation is a necessary step to align with the diverse state of China's financial industry. With institutions ranging from the world's largest commercial banks to grassroots village banks, and spanning banking, insurance, and securities, a uniform standard lacks focus and wastes resources. Only precise, tailored policies can enhance effectiveness. Researcher Lou Feipeng from Postal Savings Bank of China noted that the vast differences in size, risk levels, and equity structures among institutions make a "one-size-fits-all" approach unfeasible, while tiered and classified supervision can better tailor governance rules. Dong Ximiao, chief economist at Lianlian, observed that for large institutions, the main challenge is their sprawling business and numerous subsidiaries, which create a "too big to manage" dilemma. Their focus should be on strengthening top-level design, optimizing board checks and balances, and building a group-wide look-through risk control framework to prevent risk contagion. For small and medium-sized institutions, bottlenecks lie in talent shortages and outdated systems—a "small and weak" resource gap. Their priority should be cleaning up irregular shareholders and hidden related-party transactions, establishing clear, simple, and efficient internal controls, and avoiding copying large institutions' models. Both paths aim for a dynamic balance between risk prevention and stable development.

In recent years, there have been frequent cases where major shareholders, through controlling banks or insurance companies, have improperly extracted funds, turning these Financial Institutions into their own "cash machines" or "money bags," leading to defaults. The Opinions address this by strengthening shareholder governance from both the entry and conduct perspectives, creating a full-chain mechanism from admission and daily behavior to accountability. This aims to sever the channels for industrial capital to seek disorderly control and engage in regulatory arbitrage. The Opinions stipulate strict control over shareholder entry, building a "firewall" between industrial and financial capital. It prohibits enterprises with high leverage, severe credit breaches, or major illegal records from becoming major shareholders or actual controllers. It requires look-through identification of major shareholders, actual controllers, and beneficial owners, reinforces their reporting obligations, and forbids concealing control relationships, related party ties, or concerted actions, as well as preventing false capital contributions, circular injections, and capital flight. Dong Ximiao believes this look-through identification is a concrete embodiment of "look-through supervision," aiming to pierce through complex nominee holdings and multi-layer structures to block loopholes allowing improper intervention and insider control, and to prevent hidden risks like false capital contributions. The Opinions also strictly regulate shareholder behavior, stating that shareholders must exercise rights and fulfill obligations within the corporate governance framework, prohibiting abuse of power or improper interference in management. It bans the transfer of benefits to shareholders or related parties and establishes mechanisms for recovering improper gains and post-event compensation. It also guarantees minority shareholders' rights to information, participation, and oversight on major issues, ensuring their opinions are reflected in key matters like director and supervisor elections. Dong Ximiao sees the Opinions as a concrete implementation of principles from the revised Banking Supervision Law draft, translating legal authority over major shareholders and actual controllers into operational look-through identification rules and related-party transaction monitoring tools, constructing a full-chain defense covering pre-event admission, ongoing monitoring, and post-event accountability.

Senior executives and core professionals are key to internal governance in Financial Institutions, as their competence and integrity directly determine risk control levels. In the past, some personnel who violated rules at one institution could evade punishment by moving to another, creating gaps in accountability and lowering the cost of misconduct. The Opinions focus on this "key minority" by establishing a lifelong accountability mechanism to completely prevent "contaminated movement" of personnel and fully enforce their responsibilities. The Opinions specify strict checks on the entry of directors and senior management to enhance their professional ethics and competence, preventing illegal personnel from moving between institutions within the financial industry. It calls for increased inspection and enforcement, severe punishment for illegal activities by institutions, shareholders, controllers, directors, senior management, and financial professionals, and strict action against illegal fund occupation, financing, guarantees, and asset transfers. It also requires timely referral of intermediary agencies like accounting firms to industry authorities for any illegal clues, and mandates lifelong accountability for serious issues according to law. Dong Ximiao argues that the lifelong accountability mechanism will fundamentally remove individuals with serious records from circulating among institutions, preventing risks from migrating with personnel and effectively curbing a "race to the bottom." In the long run, this will elevate the ethical standards of the entire professional workforce. Furthermore, it pressures intermediary agencies like accounting firms, who will face severe consequences for aiding in misconduct, thereby reinforcing their role as market "gatekeepers" and driving a shift in industry culture from opportunism to compliance. Lou Feipeng believes the Opinions' sustained increase in the cost of illegal activity and establishment of a prevention mechanism for "contaminated movement" will, on one hand, compel institutions to improve internal controls and personnel management, and on the other, block the transfer of risk by illegal personnel across institutions, preventing risk from spreading across markets.